[Federal Register: November 8, 2002 (Volume 67, Number 217)]
[Notices]
[Page 68220-68221]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08no02-144]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-46762; File No. SR-CHX-2002-30]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange,
Incorporated Relating to Eligibility of Limit Orders for Trade Through
Protection and Amendment No. 1 Thereto
November 1, 2002.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice hereby is given
that on September 13, 2002, the Chicago Stock Exchange, Incorporated
(``CHX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II and III below, which Items have been prepared
by the self-regulatory organization. The Exchange filed the proposal
pursuant to section 19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(6)
thereunder,\4\ which renders the proposal effective upon filing with
the Commission. On October 30, 2002, the Exchange filed Amendment No. 1
to the proposed rule change.\5\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
\5\ See letter from Kathleen M. Boege, Assistant General
Counsel, CHX, to Nancy J. Sanow, Assistant Director, Division of
Market Regulation, Commission, dated October 29, 2002 (``Amendment
No. 1''). In Amendment No. 1, the Exchange corrected typographical
errors contained in the proposed rule text.
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The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend CHX Article XX, Rule 37(a)(3) to
clarify the rules relating to the execution of limit orders in the
specialist's book in the event of a trade through in the primary
market. The proposed rule change mirrors a change made to another CHX
rule relating to the automated execution of limit orders, which
required that a limit order be resident in the specialist's book for a
time period of 0-15 seconds (as designated by the specialist) before it
would be eligible for limit order protection. The text of the proposed
rule change is available from the Office of the Secretary, the
Commission, and the CHX.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received regarding the proposed rule change.
The text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On January 11, 2002, the Commission approved a proposed rule change
submitted by the Exchange amending Article XX, Rule 37(b)(6) of the
Exchange's rules, which, among other things, governs execution of limit
orders in the specialist's book in the event of a trade through in the
primary market.\6\ That proposal required that a limit order be
resident in the specialist's book for a time period of 0-15 seconds (as
designated by the specialist) before it would be eligible for limit
order protection.
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\6\ See Securities Exchange Act Release No. 45271, 66 FR 2712
(January 18, 2002)(order approving SR-CHX-2001-17).
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Another provision of the CHX rules, however, also addresses the
execution of agency limit orders and should have been amended as part
of the Exchange's original proposal.\7\ Through this submission, the
Exchange modifies CHX Article XX, Rule 37(a)(3) to eliminate any
confusion about the impact of the earlier rule change.
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\7\ See CHX Article XX, Rule 37(a)(3).
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2. Statutory Basis
The CHX believes that the proposed rule change is consistent with
the requirements of the Act and the rules and regulations thereunder
that are applicable to a national securities exchange, and, in
particular, with the requirements of section 6(b).\8\ Specifically, the
proposed rule is consistent with section 6(b)(5) of the Act \9\ in that
it is designed to promote just and equitable principles of trade, to
remove impediments and to perfect the mechanism of a free and open
market and a national market system, and, in
[[Page 68221]]
general, to protect investors and the public interest.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement of Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on Comments Regarding the
Proposed Rule Change Received From Members, Participants or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change does not:
(1) Significantly affect the protection of investors or the public
interest;
(2) Impose any significant burden on competition; and
(3) Become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, and the
Exchange provided the Commission with written notice of its intent to
file the proposed rule change at least five days prior to the filing
date, it has become effective pursuant to section 19(b)(3)(A) of the
Act \10\ and Rule 19b-4(f)(6) thereunder.\11\ At any time within 60
days of the filing of such rule change, the Commission may summarily
abrogate such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purpose of
the Act.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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The Exchange requested that the Commission accelerate the operative
date of the proposed rule change. The Commission believes that
accelerating the operative date of the proposed rule change is
consistent with the protection of investors and the public interest.
The Commission notes that the substance of the proposed rule change has
already been subject to a full notice and comment period as part of
another proposal, which was approved by the Commission.\12\ The instant
proposed rule change simply amends another Exchange rule to be
consistent with the previously approved change. As a result, the
Commission designates the proposed rule change to be effective and
operative upon filing with the Commission.\13\
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\12\ See note 6, supra.
\13\ For purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation.
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington DC 20549. Copies
of the submission, all subsequent amendments, all written statements
with respect to the proposed rule change that are filed with the
Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying at the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
Exchange. All submissions should refer to File No. SR-CHX-2002-30 and
should be submitted by November 25, 2002.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-28485 Filed 11-7-02; 8:45 am]
BILLING CODE 8010-01-P